According to the fascinating Wikipedia entry below, the California power cuts were entirely a result of deregulation of the power generation system.
The big utilities - Pacific Gas and Electric, Southern California Edison, and San Diego Gas and Electric - had the price at which they could sell electricity capped at the pre-deregulation price. They were also required to sell off much of their generation capacity to private companies such as Enron.
The latter thereupon devised scams whereby they could artificially limit the amount of electricity supplied by using artifices such as overbooking power transmission lines and closing down generating plant for "maintenance" at crucial times. This enabled them to charge astronomic prices on the energy spot market to the utilities which they could not pay as their own income was capped.
I always love the colourful terminology Americans dream up to describe things. The scams employed by Enron were given names such as "Fat Boy", "Death Star", "Forney Perpetual Loop", "Ricochet", "Ping Pong", "Black Widow", "Big Foot", "Red Congo", "Cong Catcher" and "Get Shorty!"
The power was there all the time but the unforseen consequences of deregulation resulted in the utilities being bankrupted, Enron and other middlemen growing fat on the proceeds, and California being subjected to years of unnecessary rolling blackouts and brownouts.
http://en.wikipedia.org/wiki/California_electricity_crisis